By Svetlana Marshall

The Government of Guyana, through the Ministry of Natural Resources, today signed off on a Production Sharing Agreement (PSA) for a shallow-water Block offshore Guyana with a consortium comprising TotalEnergies, QatarEnergy and PETRONAS.

It is the first PSA to be inked since the signing of the Production Sharing Agreement with U.S oil giant, ExxonMobil and its co-venturers in 2016.

The consortium was among companies awarded oil blocks offshore Guyana under the 2022 Licensing Round.

Minister of National Resources, Vickram Bharrat said the signing of the PSA by TotalEnergies and its partners is a show of confidence in Guyana’s robust licensing framework, and reflects the Government’s commitment to the sustainable development of the country’s natural resources. 

He said the companies bring a wealth of experience with them and the Government is pleased to have them operate in the Guyana basin.

“I want to also thank the three companies that have worked with us over a prolong period to ensure that we get it right – TotalEnergies, QatarEnergy and PETRONAS – for working through this process with the team so that we can have an ideal Petroleum Agreement that is acceptable by both parties and again that would bring benefits to Guyana and Guyanese. So, today is indeed a historic day for us and it is the first PSA that we are signing after the 2016 Stabroek PSA with improved conditions and improved fiscal terms,” the Natural Resources Minister said.

He said the agreement is a win-win situation for both the companies, and the people of Guyana, who stand to benefit.

 “Guyana is one of the few countries in the world, and we like to say this because it is a fact, one of the few countries in the world that has actually moved from a Local Content Policy to a Local Content Legislation defying the odds of many, when they said that the Local Content Legislation will close down the Oil and Gas Sector in Guyana, will not attract the big players in the Oil and Gas Sector, well today again we are defying that odd again because we are attracting major players while at the same time rolling out benefits for Guyanese, and Guyanese businesses,” the Natural Resources Minister said.

As part of the agreement, the consortium is expected to pay a signing bonus of US$15Million to the Government.

Minister Bharrat said the money will be deposited directly into the Natural Resources Fund within a period of 15 days.

TotalEnergies has a 40% share in Block S4, while QatarEnergy and PETRONAS have 30% each. Block S4 spans an area of approximately 1,788 square kilometers, located 50 to 100 kilometers off Guyana’s coast in water depths ranging between 30 and 100 meters.

TotalEnergies Vice President Exploration for Americas, Daniel Larranaga said TotalEnergies is pleased to return to the Guyana basin after 35 years, but this time with its partners – QatarEnergy and PETRONAS.

Total Energies had drilled the Arapaima well back in the early 1990s.

“It has taken us 35 years to come back as operators in this basin. Exploration is about perseverance, it is about technical excellence, it is about strategic partnership, and we have all those elements here today in S4. We have had some experiences as non-operators in the Guyana basin since about 10 years ago, and we feel that it is the exact right moment, not only because of the geological potential of the basin, it is a prolific basin that we know well,” Larranaga said.

He said the consortium is also pleased with both the fiscal and non-fiscal terms.

The consortium has assured that exploration activities will be conducted in keeping with Guyana’s regulatory requirements and international best practices for environmental protection and resource management.

Director of the Local Content Secretariat, Michael Munroe said the PSA includes improved fiscal and non-fiscal terms.

“We have a new fiscal package, as you would appreciate, previously, there was no imposition of taxation, and in this context we are now levying a 10% corporation tax, and there are also penalties for non-completion of the work programme. So, the government has taken a position that we want our participants in the basin, the new participants, to be aggressive in terms of their work programme, and in so far as they are unable to complete the work programme, there will be a penalty,” he explained.

Guyana began oil production in December 2019. It has moved from producing an average of 80,000 barrels of oil in 2020 to an average of 930,000 barrels of oil per day in the Stabroek Block.

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